When Bernier Insurance took on a new producer about six years ago, his sizable book of business put a strain on the small agency headquartered in Rochester, New Hampshire.

“Instead of growing at a steady 4-5% like we had been for many years, all of a sudden we added 10% to personal lines—and then we were anticipating growing at another 10% after that,” says Troy Dillow, president.

A friend had recently left a nearby agency to work with a new business called Virtual Insurance Pro (VIP), an outsourcing company that pairs seasoned account managers with insurance agencies to provide customer service.

Why turn to outsourcing? “We wanted to be able to focus on our employees and increase their professional development,” Dillow explains. “And we wanted that instant scalability that would allow us to take on more books of business, while still focusing on superb customer service.”

The majority of independent agencies—76% for personal lines and 79% for commercial lines—strongly prefer their clients to receive routine customer service from the agency itself, according to the most recent Future One Agency Universe Study.

Currently, only three in 10 small agencies—compared to six in 10 jumbo agencies—use carrier service centers to provide customer service to clients. But although they’re still relatively small, those numbers reflect a significant increase from previous studies—and could indicate a new direction moving forward.

Why Outsource?

Norma Milne, relationship coordinator at VIP, admits that outsourcing customer service isn’t necessarily for everyone. “If you have a model where it’s a smaller operation and the agency principals need to have that comfort where they know about everything that’s going on in the office, that’s fine,” she says.

But if your agency is in what Milne calls “growth mode,” you probably recognize that your customer service model could use some refinement: “It’s about handling volume.”

Consider many of the routine service transactions your customer service representatives handle several times a day: auto ID card requests, binders, billing questions, adding and removing cars, misplaced or lost paperwork.

This type of low-hanging fruit “really isn’t going to drive customer loyalty over time. You’re not going to have a wow experience with those,” points out Tyler Asher, president of Safeco, which offers a customer service center—Safeco Gold—for its agent partners. Outsourcing these activities “frees agents up to have interactions with the customers that are value-added—things that will build relationships and increase referrals for agents over time.”

Often, simply keeping the trains running is so time-consuming that even highly skilled reps are unable to focus on service interactions that are more meaningful to clients—account reviews and seeking cross sell opportunities, for example.

“Those routine service transactions become their day,” Milne says. “If you have quality, experienced people, you want those people to be doing comprehensive account reviews with their clients—the ones who need it, the ones who are multiline, the ones who have many policies.”

Huggins Dreckman Insurance in Los Alamitos, California has been using Safeco Gold for more than a decade. “By the end of the day, your staff is wasted, wiped out, and they didn’t even finish everything on their desk,” says Stan Dreckman, CEO. “With Gold, whatever the customer needs, it’s handled on the spot—done deal.”

“I don’t have a bunch of account managers scrambling around trying to work through a backlog of work. We’re now able to stay current, be proactive and do better, more thorough and more frequent account reviews,” Dillow agrees.

But perhaps the most important benefit of outsourcing is access. Asher notes that 27% of customer calls come in after hours or on the weekend, and Milne points out that the phones don’t stop ringing when unexpected storms shut down agency offices.

“That’s something [outsourcing] really brings in a way we can’t—24/7 coverage,” Dreckman says. “It essentially gives me a cost-effective way of creating a virtual agency. Customers can call the number any time of day or night and get any questions answered.”

How it Works

That was the reasoning behind the decision to experiment with outsourcing customer service at Joseph W. McCartin Insurance, Inc., an independent agency headquartered in Beltsville, Maryland that recently partnered with Trusted Choice® on a pilot program for using a third-party call center to answer agency phones after hours.

The agency was experiencing a large volume of calls after hours, and about 90% of them were service-related. “The plan was to see if it was possible to increase our sales numbers and avoid losing calls,” explains Mike McCartin, president. “Nobody’s call is ever missed.”

Originally, call center representatives simply asked the customer what they needed and when they’d be available for an in-house agent to call them back during office hours. “Now, we’ve moved it along so they can respond to sales and service needs in real time,” McCartin says.

Outsourcing customer service can be as robust—or not—as you like [see sidebar]. VIP’s “sweet spot” is low-level service interactions, Milne says, but the company offers a service matrix agencies can use to determine the best fit for their specific situation.

“You know your agency best, so you know what will have the most impact,” Milne points out. “A really savvy agent will go back to staff and say, ‘We’re thinking about outsourcing some service components. Let’s talk about your typical day and where you could get the most help?’”

“Do you have your most expensive, experienced account executives handling things like paperwork and very small accounts, or is that something that can be done by a provider like us so it frees up their time to focus on consultative sales with clients that require sort of the deep touch?” agrees Matt Bruno, COO and founder of ReSource Pro, which also provides outsourced customer service solutions for agencies.

At Bernier, VIP employees log on to the agency’s systems through a simple web portal, and Bernier’s receptionist forwards them phone calls pertaining to lowerlevel interactions. “It’s seamless,” Dillow says. “We have very clear workflows, processes and procedures, both written and automated, and VIP follows those explicitly.”

Similarly, Safeco Gold’s customer service offerings run the gamut from policy services and billing assistance to policy consultation. The carrier operationalizes these services “as an extension of the agency,” Asher says, which means branding the agency throughout every call.

Reaping the Benefits

For six years, Bernier has purchased 500 customer service transactions a month from VIP. “Over the course of that time period, we have not had one customer complain that they had a bad experience,” says Dillow, who adds that customer retention has increased a couple of percentage points over that time period as well.

And in-house employees enjoy dividends from outsourcing, too—Dillow has been able to increase pay substantially because working with VIP has helped him cut costs so drastically. “I have redistributed that money to my service personnel, so as they become subject-matter experts and are dealing with more intricate problems and topics, I’m able to compensate them accordingly,” he explains.

Dreckman says his monthly fees for Safeco Gold amount to approximately what it would cost to pay benefits for the two employees that he’d need to hire to cover what the service center handles. “And now I avoid the expense of the payroll, payroll taxes, desk expenses and supplies, workers comp, phone lines, agency management system access—everything.”

Outsourcing customer service can also help reduce your agency’s errors & omissions exposure. “The quintessential insurance professional is doing 20 different things in a day—they’re on the phone with a client, they’re trying to email, they’re trying to market business or rate,” Bruno points out. “When you’re doing that in an office environment, just one person doing all those things, mistakes happen a lot.”

Outsourcing adds multiple layers of checks and balances to the mix. Milne says VIP’s biggest “wow factor” isn’t even time or cost savings—it’s the company’s commitment to precise, consistent documentation. “Things don’t slip through the cracks because of the process and procedures we have in place,” Dillow says. “The quality assurance and oversight in VIP’s organizational management is fantastic.”

Finally, many providers also employ advanced analytics in order to help agencies identify cross- and up-sell opportunities within their existing books. Asher says Safeco Gold converts one out of 12 calls into a lead—and out of those, they close 40% of the time.

Those are all tangible benefits that potentially promote organic growth. “I’ve been around a long time, and for decades companies have been talking about how customer service is a sacred cow for independent agents,” Dreckman says. “Well, I hate to tell you, but that sacred cow got butchered about 10 years ago. The world’s changing very quickly. It’s no longer enough to just provide great customer service. We all have to find new angles.”

Jacquelyn Connelly is IA senior editor.